"Would I have like to have spent less? Absolutely. I'm a fiscal conservative. I spent $8 million coming up second in a Republican primary for the U.S. Senate. If you have to put it in perspective, wouldn't you say this is better?"

Overall, Issa noted, while the state is still spending too much, "Republicans are not happy, Democrats are not happy, but the people of California are happy."

Davis, who seems more popular and relaxed since California voters recalled him, said he would leave the answer to voters and pundits. Although he quipped, "My wife says if she had known life would be this good, she'd have voted for the recall."

Far from being angry, Davis gives much credit to Schwarzenegger: He "is a great salesman. That's a huge part of politics today."

Davis noted that while he signed a global-warming bill, Schwarzenegger's support for a later measure "has given far more currency to the issue than I ever could."

Which is why many Republican global-warming skeptics are unhappy with Schwarzenegger - even if, as spokesman Adam Mendelsohn noted, Schwarzenegger uses a "market-oriented" approach, instead of regulation. Schwarzenegger has the highest veto rate of any governor in 40 years.

As for legal corruption, it's alive and well in Sacramento. Special interests plow money into the California Recovery Team, which funds Schwarz-enegger when he's not paying for his private plane out of pocket.

Now, it seems, Democratic leaders have come down with a serious case of Arnold Envy.

The Los Angeles Times reported on the $5.3 million Friends of Fabian Nuñez fund that has paid for the Assembly speaker's fact-finding missions to South America, Barcelona, Spain, and Bordeaux, France.

California Republican Party Vice Chairman Jon Fleischman, who endorsed the governator in 2003, noted Schwarzenegger vetoed "a lot of bills that Davis would have signed. The trade-off is that as a Republican governor, his ability to leverage for more spending and higher taxes is amazing. No one has the ability to increase spending like a Republican chief executive." Fleischman threw in President Bush as another example.

The state budget under Schwarzenegger rose from$101 billion to $131 billion. Only through borrowing has Sacramento balanced the budget.

Worse, having come into office repealing a vehicle tax, Schwarzenegger recently signed a bill to raise smog abatement fee for new cars from $12 to $20 and tack on $3 to car registration fees. Fleischman is angry because those are tax hikes.

Many insiders agree Schwarzenegger's biggest mistake was to agree to push three ballot measures - later expanded to four - in 2005. Voters thought he was being too political.

It didn't matter that the budget reform and redistricting measures would have delivered badly needed reforms.

Schwarzenegger abandoned budget reform; the state is still spending more than it takes in, and many on the right feel let down. Salazar's verdict: "Apart from the theatrics," it's "new guv, same as the old guv."

Or, as Davis observed, Schwarzenegger discovered that governing California "is not pickup sticks. And you frequently are exposed to problems that are beyond your control."

Then Davis explained to me, as succinctly as can be, the morass - my term - that passes for government in California and America:

"Throughout America, the public is living beyond its means. However, there is no appetite to send the government more of their discretionary income. Elected officials have to come to terms with that. People want services. People want their programs financed. But they don't want to send any more money to Sacramento or Washington. It's your job as an elected official to figure out how to respond to the rising tide of expectations for government services within the resources the economy provides."

Schwarzenegger promised to be a governor-action hero, but he morphed into a mortal, if able, politician who helped the economy, made the state better off than when he started - and learned to fear the voters' wrath.

So he's come up with a new gimmick to fund his proposed universal health care package - leasing the lottery to a private company to generate $2 billion of the $12 billion. A big new government program - that Californians really want as long as they don't have to pay for it.

The voter anger that swelled when the Davis administration raised the car tax - and led to his recall - is gone.

The recall taught state pols what happens when they raise taxes, and the 2005 special election showed what happens when a governor tries to curb spending even moderately.

No worries. To paraphrase Issa, the voters are happy.

Saunders is a columnist for the San Francisco Chronicle. Her e-mail address is dsaunders@sfchronicle.com.

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